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Windar Photonics feels the wind in its sails as joins AIM

Published: 08:42 30 Mar 2015 EDT

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Shares in Windar Photonics (LON:WPHO) felt the breeze behind them as they raced to a premium on their first day of trading on AIM.

The company, a spin out from the Technical University of Denmark, builds laser guided units called LIDARs that sit atop wind turbines and line them up properly.

Its units are significantly (around 70%) cheaper than the competition and are easier to install than existing technology.

Crucially, they optimise the performance of these giant structures, and initial results reveal that wind turbine energy efficiency can be increased by 1-3%.

While that may not seem a lot, payback on a large six megawatt system might be as little as six months, or three years for the traditional 1.5-2 megawatt turbines.

“With our technology it is significantly cheaper; the product is meant to be there. So it's designed and tested for this harsh environment,” chief executive Martin Rambusch told Proactive Investors.

“The reason it is so much cheaper is the light source, the laser we use. It is a semi-conductor laser, which is much more cost efficient than the [technology the] competitors use.”

The company joined the market with an initial valuation of £38.2mln.

It raised £5.88mln pre-float that should see it through to break-even, which analysts reckon will occur in the next year.

“The majority of the money will give us a strong balance sheet, which is important to our customers and suppliers,” said Rambusch.

“But it also goes to expanding our business, getting new people on board and expanding R&D.”

The company is headquartered in Taastrup, a suburb of Copenhagen, and has sales offices in Hamburg, Madrid, Shanghai, Toronto and Atlanta.

So the cash will aid the roll-out globally of its technology. To date the company has sold 80 units, but the opportunity is huge; the Windar chief executive reckons there is the need for 130,000 new or retrofitted units.

The impact of the potential sales ramp-up is reflected in forecasts released by the research firm Edison, which expects revenues to be €5.7mln in 2015 (resulting in a modest loss).

Analyst Roger Johnson reckons turnover will be almost €30mln next year, generating pre-tax profits of €12.7mln.

Rather surprisingly for a company at this formative stage of its development it already has a dividend policy in place.

So, for 2016 Windar will pay out at least half of all distributable profit. Edison is predicting the firm will declare a 10 euro cents divi, rising to 30 cents and then 60 cents by 2018.

According to Edison’s projections, revenues will be €97.1mln in 2018, giving normalised pre-tax profits of €56.75mln.

The shares, listed at £1, are currently changing hands for 115p each but are worth between 83p and 242p on a discounted cash flow basis, according to the City research firm.

Rambusch said listing Windar in the UK put it in the shop window internationally.

“By being exposed to AIM and the London Stock Exchange it has really given us international transparency and exposure we were looking for,” the Windar chief said.

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